At Browning Oil Co. v. Luecke[4] The Austin Court of Appeal considered the standard that an operator/tenant will resist in terms of how production is distributed between undated wings. At Browning, the tenant had a horizontal well drilled on several ungoverned wings, and the court asked the lessor to pay the lenders` royalties on the basis of a “production determination that can reasonably be attributed to their wings.” [5] Finally, Springer Ranch, Ltd. v. Jones[8] answered the question of whether an operator/tenant was properly distributing production from a horizontal well crossing ungoverned wings. However, in Springer, the Tribunal`s decision was based on the interpretation of a particular language in an underlying contract and a division agreement that was not provided in the notice. Therefore, Springer does not provide usable standards for the situation in which a lease simply pierces undigred wings, without contractual agreement, in order to influence the way in which the parties involved participate in the production. Wait for a division order and then determine your participation situation on a good basis. Austin Lee focuses his practice on representing and advising clients on the acquisition and sale of oil and gas properties, saltwater remediation facilities, storage, platforms and other facilities. He also assists clients in all aspects of domestic and international oil and gas activity, from production to sales, including the negotiation and analysis of joint enterprise agreements; Operating agreements for units and units; collective development agreements, leasing and drilling operations, farms and other joint venture agreements; Leases Seismic data…

While it seems clear that the main risk associated with these wells is a potential demand from donors (or other owners of labour interests) for poor production allocation, PPE and allocation wells also pose additional land management problems due to the well not being drilled on a pooled unit. For example, the well will only keep leases on the wings through drilling. Areas outside the areas traversed by the EPI well or allocation remain subject to the policyholder`s obligations with respect to the payment of late rents and other local charges, as well as to its unspoken obligations (i.e. to protect these areas from drainage). These problems can be painful, especially if there is a highly productive horizontal well that leads to the drainage of real estate in the area. In addition, distance derogations are required for parts of the horizontal drilling located within the return distances of the land lines of the wings crossed, where the taker is not the sole owner of the operating interests in the lease agreement. By signing a production-sharing agreement, royalty owners can participate in drilling and development royalties, which include both land in the unit that owns its interests and other units. In other words, royalty owners can receive royalties for resources that otherwise could not be recovered.

According to most oil and gas leases, oil and gas companies can only consolidate a limited amount of land for a single unit, which has allocated 40 hectares for oil and 640 hectares for gas.